For, this gives us a clear picture on whether they have "skin in the game" -- or whether they put their money where their mouth is.
Here's the latest analysis of the Indian mutual fund industry, which shows if your fund manager is investing in the same schemes along with you.
The data analysed was for the largest 100 equity and hybrid mutual funds which comprise of total assets of Rs. 7,91,481 crore as of July 31st, 2018. The data was collated and analysed by Outlook Asia Capital.
At a glance, below is the sum total of investments (in rupees).
|
Total investment by fund managers in own schemes |
Investment by other key personnel |
Investment by AMC board directors. |
|
234 crore |
222 crore |
1205 crore |
While several fund managers and CEOs talk about passive investing and ETFs, they hardly invest in their companies' index funds and ETFs.
Most of fund managers' investments are in their active funds -- encouragingly demonstrating that they believe these funds will be able to generate alpha, or excess returns over the benchmark.
The mutual fund scheme that has the largest investment by its fund managers is ICICI Prudential Balanced Advantage Fund, with an investment value of Rs 53.58 crore.
The scheme that has the largest investment by its key employees is HDFC Infrastructure Fund: Rs 30.57 crore. While it is not explicitly stated, this investment in HDFC Infrastructure Fund could largely be from HDFC AMC CIO Prashant Jain.
The mutual fund scheme, which has the largest investment by the AMC board directors is Motilal Multicap 35 Fund, with an investment value of Rs 414.55 crore.
Prashant Jain has a total investment value of Rs 77.95 crore (excluding any investment in HDFC Infrastructure Fund), which is predominantly put in equity schemes.
ICICI Prudential's S Naren, along with his co-fund managers, has an investment of approximately Rs 102 crore in hybrid asset allocation schemes. Clearly, managers of both these fund houses eat their own cooking.
There are a total of 32 schemes out of the top 100, in which fund managers have no investments of their own, and another 18, where the investment is less than Rs 10 lakh. Thus almost 50 percent of these schemes have negligible investment by their own fund managers
Here's the list of the 50 largest funds and the total investments in them by the fund manager, key employees and AMC Directors.